Four and a half years after crisis conditions erupted, nothing's been done to resolve them. The smartest guys around haven't fixed things.

On June 14, rumors circulated about coordinated central bank intervention. European banks are especially troubled. Recapitalizing them hasn't worked.

Expecting more of the same to accomplish what hasn't so far worked is another way of defining failure.

Along with talk of more stimulus, Egan-Jones Ratings, an independent NRSRO (Nationally Recognized Statistical Rating Organization), downgraded French sovereign debt from A- to BBB+ with a negative outlook. Doing so shows core European weakness.

Dutch banks were also downgraded. So were Spanish ones and sovereign Spanish and Cyprus debt. Both countries approach junk status.

Germany shows weakness. Its 10-year sovereign debt jumped over 30 basis points from recent lows. It's troubled by having to fund more bailouts or face euro dissolution issues. It's also pressured by having to shore up the ECB in case it's threatened.

The average Eurozone country has a 500% debt/GDP ratio. Expects more defaults, write-downs, and frantic steps to shore up sovereign debt.

Multiple intervention rounds solved nothing. Neither will more of the same. Structural problems remain unresolved. More time alone is bought. It doesn't come cheap. The price is greater debt, higher service costs, and eventual crisis conditions too grave to fix.

The head of the World Bank said Sunday that Europe’s bail-out of the Spanish banking system had been handled very badly and amounted to a wasted opportunity to contain the debt crisis.

Addressing business leaders on the eve of the G20 summit in Mexico, Robert Zoellick and other senior international economists said that Europe needed to improve its institutional response in order to reassure bond markets.

“Look everyone knows this meeting is coming at an absolutely critical time — and we’re waiting for Europe to tell us what it is going to do,” he said at a panel in the B20 business summit, held in parallel to the G20 meet.

What We Can Learn From Iceland For all the fearmongering we hear out of our politicians on the right about how heaven forbid we're going to turn into Greece, the one country you never hear them talk about any more is Iceland. The reason they don't is, as Cenk Uygur explained on his show this Tuesday, they took a different path than the United States after their financial crisis and nationalized the banks, threw some the people responsible for the crash in jail and bailed out the homeowners instead of worrying about only bailing out the banks. And now they're coming back and their economy is growing again...

The Widespread Economic Myths Destroying the EconomyThere are many widespread myths preventing an economic recovery, including the following myths:

- Military spending stimulates the economy

- The banks are acting more conservatively now than before the financial crisis

- We’ve got to prop up the big banks

- We’ve got to protect the bondholders against suffering big losses

- The government has prosecuted the financial fraud which it has discovered, but it’s hard to make out a case against most of Wall Street’s acts

- The economy always returns to equilibrium and stability by itself

Obama’s belief that unemployment is good for the economy, and Greenspan’s belief that too little debt is bad for the country are also ridiculous.

But the most dangerous myth – because a lot of economic policy is based upon it, and because so few know that it is false – is the myth about how banks make loans.

The Myth that Private Debt Doesn’t MatterBefore we can address the myth about how banks make loans – and as a way to understand the deadly effect of that misconception, we need to talk about debt.

As economics professor Steve Keen documents in his must-read book, Debunking Economics: The Naked Emperor Dethroned, mainstream economists – from both the left and the right – don’t even take debt into consideration in their models of what makes for healthy economies.

September-October 2012: When the trumpets of Jericho ring out seven times for the world before the crisisThe progression of world events unfolds in accordance with the anticipations mapped out by LEAP/E2020 during these last few quarters. Euroland has finally come out from its political torpor and short-termism since François Hollande’s election (1) as France’s president and the Greeks have just confirmed their willingness to resolve their problems within Euroland (2) thus contradicting all the Anglo-Saxon media and Euro sceptics’ “forecasts”. From now on, Euroland (in fact the EU minus the United Kingdom) will therefore be able to move forward and create a true project of political integration, economic efficiency and democratization over the 2012-2016 period as LEAP/E2020 anticipated last February (GEAB N°62. It’s positive news but, for the coming six-month periods, this “second Renaissance” of the European project (3) will really be the only good news at world level.

All the other components of the global situation are in fact pointed in a negative, even catastrophic, direction. Here again, the main media are starting to echo a long-standing situation anticipated by our team for summer 2012. Indeed, in one form or another, more often on the inside pages than in big headlines (monopolized for months by Greece and the Euro (4)), one now finds the following 13 topics: CONTINUE: [link to globalresearch.ca]

Yes, it is officially time to start freaking out about the global economy. The European financial system is falling apart and it is going to go down hard. If Europe was going to be saved it would have happened by now. The big money insiders have already pulled their funds from vulnerable positions and they are ready to ride out the coming chaos.

Over the next few months the slow motion train wreck currently unfolding in Europe will continue to play out and things will likely really start really heating up in the fall once summer vacations are over.

Most Americans greatly underestimate how much Europe can affect the global economy. Europe actually has a larger population than the United States does. Europe also has a significantly larger economy and a much larger banking system. The world is more interconnected today than ever before, and a collapse of the financial system in Europe will cause a massive global recession. Once the global economy slides into another major recession, it is going to take years to recover. The pain is going to be immense. Yes, that is going to include the United States. Sadly, we never recovered from the last recession, and it is frightening to think about how much further this next recession is going to knock us down.

The big problem is that there is simply way, way, way too much debt in the United States and Europe. It has been a lot of fun spending all of this borrowed money, but now we get to pay the price.

When Jamie Dimon, CEO of JPMorgan Chase Bank, appeared before the Senate Banking Committee on June 13, he was wearing cufflinks bearing the presidential seal. “Was Dimon trying to send any particular message by wearing the presidential cufflinks?” asked CNBC editor John Carney. “Was he subtly hinting that he’s really the guy in charge?”

The groveling of the Senators was so obvious that Jon Stewart did a spoof news clip on it, featured in a Huffington Post piece titled “Jon Stewart Blasts Senate’s Coddling Of JP Morgan Chase CEO Jamie Dimon,” and Matt Taibbi wrote an op-ed called “Senators Grovel, Embarrass Themselves at Dimon Hearing.” He said the whole thing was painful to watch.

“What is going on with this panel of senators?” asked Stewart. “They’re sucking up to Jamie Dimon like they’re on JPMorgan’s payroll.” The explanation in a news clip that followed was that JPMorgan Chase is the biggest campaign donor to many of the members of the Banking Committee.

That is one obvious answer, but financial analysts Jim Willie and Rob Kirby think it may be something far larger, deeper, and more ominous. They contend that the $3 billion-plus losses in London hedging transactions that were the subject of the hearing can be traced, not to European sovereign debt (as alleged), but to the record-low interest rates maintained on U.S. government bonds.

The national debt is growing at $1.5 trillion per year. Ultra-low interest rates MUST be maintained to prevent the debt from overwhelming the government budget. Near-zero rates also need to be maintained because even a moderate rise would cause multi-trillion dollar derivative losses for the banks, and would remove the banks’ chief income stream, the arbitrage afforded by borrowing at 0% and investing at higher rates.

A week ago, President Obama gave a speech, billed as a major statement on economic policy, that was remarkable only for the brazenness of its cynicism and dishonesty.

Attempting to cast the November election as a contest between diametrically opposed economic and social programs, Obama declared: “But more than anything else, this election presents a choice between two fundamentally different visions of how to create strong, sustained growth; how to pay down our long-term debt; and most of all, how to generate good, middle-class jobs so people can have confidence if they work hard, they can get ahead.”

Obama called the choice between the two perspectives “the defining issue of our time,” and added, “What’s holding us back is a stalemate in Washington between two fundamentally different views of which direction America should take. And this election is your chance to break that stalemate.”

Obama claimed that his “vision” was driven by concern for the “middle class,” while that of his Republican opponent, Mitt Romney, was geared to the wealthy. The lengthy speech, given in Cleveland, one of many Midwestern cities devastated by long-term industrial decline compounded by more than three years of mass unemployment, included acknowledgments of the vast growth of social inequality and allusions to wholesale fraud committed by banks and corporations.

“Over the past few decades,” Obama said, “the income of the top 1 percent grew by more than 275 percent — to an average of $1.3 million a year. Big financial institutions, corporations saw their profits soar. But prosperity never trickled down to the middle class.”

He continued: “Without strong enough regulations, families were enticed, and sometimes tricked, into buying homes they couldn’t afford. Banks and investors were allowed to package and sell risky mortgages. Huge, reckless bets were made with other people’s money on the line. And too many from Wall Street to Washington simply looked the other way.”

In Part 1 of this three part series I addressed where and how the net worth of the middle class was stolen. In Part 2, I will tackle who stole your net worth and in Part 3, why they stole your net worth. Now let’s zero in on the culprits of this crime.

Dude, Who Stole My Net Worth? “Thus far, both political parties have been remarkably clever and effective in concealing this new reality. In fact, the two parties have formed an innovative kind of cartel—an arrangement I have termed America’s political duopoly. Both parties lie about the fact that they have each sold out to the financial sector and the wealthy. So far both have largely gotten away with the lie, helped in part by the enormous amount of money now spent on deceptive, manipulative political advertising.”– Charles Ferguson – Predator Nation

When you dig into the charts and data supplied by the Federal Reserve generated report, the data which goes back to 2001 tells a story not addressed by the deceptive, manipulative, political propaganda that passes for investigative reporting by the captured mainstream media. The chart below compares the median versus mean income growth from the last three Fed consumer surveys. Overall, it reveals a lost decade of negative income growth for the average middle class family. In the early part of the decade the average middle class family made some progress as jobs were relatively plentiful and the internet crash mostly impacted the rich, who own most of the stocks in the country. This is why the median income rose while the average income fell. The wealthy have a large impact on the average because they own the vast majority of assets in this country. The stock market debacle was unacceptable to the oligarchs and their money printing puppet Greenspan.

It is now coming on close to four years since the collapse of Lehman Brothers in the autumn of 2008. The events of the past several months underscore two fundamental features of the crisis that emerged out of the subsequent financial collapse: 1) that it is systemic, not temporary; and 2) that it is global, affecting every country in the world. Globally integrated capitalism has created a globally integrated catastrophe.

This week, a series of economic figures were released confirming this analysis. Hopes from bourgeois commentators that the debt crisis in Europe could be offset by economic growth in Germany, or that weakness in the West as a whole could be counterbalanced by strong production in Asia, are being dashed with each passing day.

In fact, production in both Germany and China is contracting, in large part due to falling exports. According to Thursday’s figures, Germany’s composite purchasing managers index hit a three-year low, falling to 48.5 in June from 49.3 a month before. The HSBC China Manufacturing Purchasing Managers’ Index likewise fell to 48.1 in June, down from 48.4 in May. It was the eighth consecutive month of readings below 50, indicating contraction.

Other major “developing” economies are doing no better. India’s economy grew only 5.3 percent in the first quarter of the year, its lowest growth rate in nine years and down nearly four percentage points from 2011. The Brazilian Central Bank said last week that the country’s economy probably contracted in April compared with a year earlier, the first such yearly decline since late 2009.

22 Statistics That Prove That The American Dream Is Being Systematically DestroyedMichael Snyder, ContributorTuesday, June 26, 2012Activist Post

The American Dream is being systematically destroyed right in front of our eyes and most Americans don't even realize what is happening. In the old days, if you were a hard worker and you played by the rules you could always find a good job. That good job would enable you to buy a house, buy at least one car and support a family. It would also enable you to take a couple of vacations each year and buy some nice things for your family. After working for 30 or 40 years you would look forward to a comfortable retirement.

But these days fewer and fewer Americans are able to enjoy the American Dream. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a breathtaking pace. Our economy is not producing nearly enough jobs for all of us anymore, and an increasing percentage of the jobs that are being produced pay 10 dollars an hour or less. The cost of living continues to rise steadily every single year while wages do not. Close to half of all American workers are living month to month, and many American families have gone deep into debt as they struggle to pay the bills. Millions more Americans are falling into poverty each year and dependence on the government is at an all-time high.

Proposals from BIS, OCC and FDIC Would Reclassify Gold as a Tier 1 AssetThere are many, many, many, many reasons why gold prices should go higher, despite claims that gold is in a bubble … and despite the fact that gold prices may be manipulated.

A giant new reason may be heading our way …

Specifically, the central banks’ central bank – the Bank of International Settlements (BIS) – is considering reclassifying gold as risk-free assets as part of the Basel III framework.

As BIS notes in its progress report on Basel III implementation: At national discretion, gold bullion held in own vaults or on an allocated basis to the extent backed by bullion liabilities can be treated as cash and therefore risk-weighted at 0%.

Currently the US is now over $15 trillion in debt. [1] The national debt has now gotten to the point where it is larger than US GDP and is now unpayable. In response to this crisis, many in government have been arguing for austerity measures, yet they have not been using that actual term, rather there has been an argument for deep cuts in social spending, with one example being Paul Ryan’s budget proposal which targets mainly the poor and elderly. The debt crisis may very well lead the US to being forced to choose from two poisons, austerity on one hand and default on the other.

Austerity measures are currently being pushed by the intellectual elite. Niall Ferguson argues that the main problem in Western democracies “is the huge debts we have managed to accumulate in recent decades, which - unlike in the past - cannot largely be blamed on wars” and poses the question “[W]ould young people be wise to encourage politicians to pay-off national debts now to avoid an even more miserable financial future?” [2]

In the US, Pacific Investment Management Co.’s Neel Kashkari, states that the US should “stop kicking ‘the can down the road’ and implement fiscal austerity measures so the economy can fully recover from the financial crisis.” [3] While Ferguson states that the debt “cannot be blamed on large wars,” the facts prove him to be incorrect as during the Clinton Administration there began a decrease in the national debt and ended with the US being in the black. [4] When President Bush came in, the US went back deeply into debt and this debt increase can be blamed mainly on the Afghanistan and Iraq wars.

The arguments for austerity, while they may be many, are nullified by the fact that the International Monetary Fund, the biggest advocate of austerity for so-called third world countries (and increasingly for many first-world European countries), has admitted that austerity only hurts income and worsens long-term unemployment. [5] In other words, austerity only makes a bad economic situation worse. Yet, this begs the question, if austerity doesn’t work, then why are people arguing in favor of it? This question can be understood by examining the situation from the perspective of the banks. Austerity measures result in large amounts of privatization and thus allow for banks to buy up essential services such as water and electricity systems for dirt-cheap prices and then the banks can make large amounts of money from the perpetuity of state assets. Thus, the banks that gave the loans will then be able to recoup the amount of the loan and then make much more money.

Bank for International Settlements on Big BanksJames Hall, ContributorWednesday, June 27, 2012Activist Post

The shadow-banking component that adds to the risk of non-regulatory oversight just deepens the mystery behind the most powerful banking institution that runs roughshod over global finance. In order to gain an insight into the complexity of deception, examine the function of the BIS. The granddaddy of all central banks, the Bank for International Settlement, latest BIS Annual Report 2011/2012, foretells future financial consolidation.

How is money created? If you ask average people on the street this question, most of them have absolutely no idea. This is rather odd, because we all use money constantly. You would think that it would only be natural for all of us to know where it comes from. So where does money come from?

A lot of people assume that the federal government creates our money, but that is not the case. If the federal government could just print and spend more money whenever it wanted to, our national debt would be zero. But instead, our national debt is now nearly 16 trillion dollars. So why does our government (or any sovereign government for that matter) have to borrow money from anybody? That is a very good question.

The truth is that in theory the U.S. government does not have to borrow a single penny from anyone. But under the Federal Reserve system, the U.S. government has purposely allowed itself to be subjugated to a financial system in which it will be constantly borrowing larger and larger amounts of money. In fact, this is how it works in the vast majority of the countries on the planet at this point. As you will see, this kind of system is not sustainable and the structural problems caused by such a system are at the very heart of our debt problems today.

How Banks Create Money out of Thin Air "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."- Thomas Jefferson